Look Out Circular quashed for violating MHA Office Memorandum 22.02.2021 and lacking justiciable reasons, despite investigation cooperation

HC allowed the writ petition, holding that the Look Out Circular issued in 2022 and its subsequent renewals were contrary to the Ministry of Home Affairs' Office Memorandum dated 22.02.2021 and unsustainable in law. The Court emphasized that an LOC can be issued only on justiciable reasons, particularly where an accused is evading arrest or likely to flee, and cannot be justified merely on registration of an FIR. As the petitioners had cooperated with investigation and no periodic review of the LOC was undertaken by the originator, its indefinite continuation was held illegal, and the LOC was quashed.

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1. ISSUES PRESENTED AND CONSIDERED

(1) Whether the issuance of a Look Out Circular against the Petitioners was permissible under the consolidated guidelines/Office Memorandum dated 22.02.2021, in the absence of any registered cognizable criminal case and when only proceedings under the Customs Act, 1962 were pending.

(2) Whether the continued operation and renewals of the Look Out Circular, without periodic review by the Originating Agency, were valid in light of the Office Memorandum and the right to travel under Article 21 of the Constitution of India.

(3) Whether the Look Out Circular could be justified on the ground of alleged non-cooperation in investigation and the seriousness of alleged economic offences, including by invoking the "exceptional cases" clause relating to economic/strategic interests of India.

(4) Whether the Petitioners' withdrawal of earlier writ proceedings before another High Court without liberty to file afresh operated as a bar to the present writ petitions.

(5) Whether a stay of the quashing of the Look Out Circular ought to be granted.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Validity of issuance of LOC in absence of cognizable offence / criminal case

Legal framework

The Court considered the consolidated guidelines in the Office Memorandum dated 22.02.2021 governing issuance of Look Out Circulars, including clauses (H), (I) and (L): recourse to LOC is to be taken in cognizable offences under IPC or other penal laws; in cases where there is no cognizable offence, the LOC subject cannot be detained/arrested or prevented from leaving the country, and only intimation of arrival/departure can be requested; and in exceptional cases LOC may be issued where departure is detrimental to sovereignty, security, integrity, bilateral relations, strategic and/or economic interests of India or larger public interest.

Interpretation and reasoning

The Court found that no cognizable offence under IPC or other penal laws had been registered against the Petitioners; only proceedings under the Customs Act in the form of investigations and show cause notices were undertaken, some already adjudicated and some pending. The Petitioners had been granted anticipatory bail; no steps for its cancellation had been taken. The action against the Petitioners was essentially in the nature of fiscal/administrative proceedings rather than criminal prosecution.

The Court held that the guidelines clearly require that, for an LOC involving detention/prevention from travel, there must be a cognizable offence and reasons recorded that the person is evading arrest or likely to flee. Mere pendency of investigation under the Customs Act or issuance of show cause notices, without registration of a cognizable criminal case, did not satisfy the threshold of clause (H). The consolidated guidelines envisage that, where there is no cognizable offence, only a request for intimation of travel movements can be made, not detention or restriction on travel as in the present LOC.

The Court examined the internal notings produced and found no specific or reasoned order directing issuance of an LOC; instead, at the relevant time, in light of an earlier High Court order restraining coercive steps, it had been advised that LOC, being a coercive measure, should not be issued and only summons should be used. The Court thus found that even at the departmental level the basis for LOC was not transparently or properly recorded.

Conclusions

The issuance of the LOC against the Petitioners did not meet the parameters of the Office Memorandum, as there was no cognizable offence or criminal case, nor were the conditions for recourse to LOC in such circumstances fulfilled. The LOC was therefore contrary to the guidelines and invalid ab initio.

Issue (2): Legality of continued operation of LOC without review and impact on Article 21 right to travel

Legal framework

The Court relied on clause (J) of the consolidated guidelines, which stipulates that an LOC remains in force until deletion is requested by the Originator, but the Originating Agency must review LOCs quarterly and annually and submit proposals to delete them where appropriate, so that "liberty of the individual is not jeopardized". The Court further recognised the right to travel abroad as a facet of the fundamental right to life and personal liberty under Article 21 of the Constitution.

Interpretation and reasoning

The LOC had remained in force for more than three years from 19/20.04.2022. The Court recorded the concession of the Respondent's counsel that no review of the LOC had been undertaken. This was directly contrary to clause (J), which mandates periodic review.

The Court observed that during this period, investigations had concluded in substantial part and show cause notices were issued and adjudicated, with appeals pending; yet no criminal proceedings were initiated. The Department had consciously resorted to proceedings under the Customs Act rather than criminal prosecution. Therefore, pendency of investigation or adjudication under the Customs Act could not justify indefinite continuation of an LOC.

The Court noted that, on multiple occasions, it had permitted the Petitioners to travel abroad for business; they had returned each time, which undermined any assertion of flight risk. The Petitioners had longstanding business operations, immovable properties, factories and roots in India. In this factual background, continued restriction on their travel was held to be an unjustified encroachment on their Article 21 right to travel.

The Court held that LOC, being a coercive measure, cannot be used as a substitute for statutory modes of investigation or enforcement, nor can it be kept in force indefinitely without review, especially when the foundational circumstances (investigation stage, absence of criminal case, cooperation of the Petitioners) did not warrant such a measure.

Conclusions

The continuation and renewals of the LOC without any periodic review were contrary to clause (J) of the Office Memorandum and constituted an unlawful and disproportionate restriction on the Petitioners' Article 21 right to travel. The LOC could not be allowed to remain in force indefinitely.

Issue (3): Justification of LOC based on alleged non-cooperation and seriousness of economic offence, including reliance on "exceptional cases" clause

Legal framework

The Respondents invoked the guidelines' emphasis on serious offences and the "exceptional cases" clause (L), which allows LOCs even beyond standard categories where departure is detrimental to sovereignty, security, integrity, bilateral relations or the strategic/economic interests of India, or where larger public interest so requires.

Interpretation and reasoning

The Respondents argued that the Petitioners had not honoured summons and were non-cooperative, that there was a prima facie case of high-value duty drawback fraud causing huge economic loss to the exchequer, and that economic offences, especially during a pandemic, warranted strict measures such as LOC.

The Court held that mere assertions of non-cooperation and seriousness of economic offences, without a cognizable criminal case and without the Petitioners being shown to be evading arrest or trial, could not justify an LOC that detains or restricts travel, given the clear stipulation in clause (H) and (I). The Court accepted the Petitioners' position that they had appeared before the authorities and their statements were recorded, investigation had culminated in show cause notices and adjudication, and the Department had sufficient statutory powers under the Customs Act to secure documents or enforce compliance.

The Court specifically held that the insistence of the Respondent on obtaining US customs declarations from the Petitioners could not be a basis for invoking or continuing an LOC; if such documents were required, there were "ways and means" under the statute to secure them. LOC could not be converted into an investigative tool to compel production of documents.

As to clause (L), the Court did not find any material or reasoning that departure of the Petitioners would be detrimental to sovereignty, security, integrity, bilateral relations, strategic or economic interests of India in the sense contemplated by that clause, nor that larger public interest required their departure to be blocked. The assertion of "economic offences" alone, at an investigative/adjudicatory stage under the Customs Act and without criminal prosecution, was insufficient to invoke the exceptional clause.

Conclusions

Alleged non-cooperation, pendency of investigation, and the gravity of supposed economic offences did not, in the facts of the case, satisfy the conditions of the consolidated guidelines, including the "exceptional cases" clause. These grounds were insufficient to justify either issuance or continuation of the LOC.

Issue (4): Effect of withdrawal of earlier writ petitions before another High Court without liberty

Interpretation and reasoning

The Respondents, relying on precedent, contended that the Petitioners' earlier withdrawal of writ petitions before another High Court without liberty to file afresh barred the present petitions. The Court noted this objection but proceeded to examine and decide the merits of the challenges to the LOC, including scrutiny of the Office Memorandum, internal notings, and factual matrix of investigation and travel permissions.

No finding was recorded that the present petitions were barred on this ground; conversely, the Court entertained and allowed the writ petitions, implying that the prior withdrawal did not preclude the present proceedings.

Conclusions

The objection based on earlier withdrawal of writ proceedings did not operate as a bar to the present writ petitions; the Court proceeded to and did adjudicate the matter on merits.

Issue (5): Request for stay of order quashing LOC

Interpretation and reasoning

Post-judgment, the Respondents sought a stay of the order quashing the LOC. The Court referred to its conclusions that (i) the LOC could not have been validly issued against the Petitioners under the applicable guidelines, and (ii) it could not have been continued without proper review and extension. In light of these merits, and given that the LOC was found to be contrary to the Office Memorandum and to have illegally restricted the Petitioners' liberty, the Court declined to suspend its operative directions.

Conclusions

The prayer for stay of the judgment and order quashing the LOC and its renewals was rejected.

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